Category: Uncategorized

I. Introduction

Electricity Market Licensing Regulation (“Regulation”), introduced by Energy Market Regulatory Authority (“EMRA”), regulates (i) pre-licensing and licensing procedures and (ii) rights and liabilities of pre-license and license holders in the Turkish electricity market.  

The Regulation has been recently amended by EMRA with the Regulation Amending the Electricity Market Licensing Regulation (“Amendment Regulation”). The Amendment Regulation has been published in the Turkish Official Gazette on December 23, 2015 and entered into force on its publication date. 

II. Significant Amendments 

The significant amendments made to the Regulation are as follows:

• Legal notifications can be served through registered electronic mail to legal entities in accordance with the Notification Law. In this respect, (i) pre-license or license holder legal entities and (ii)  legal entities which applied for pre-license or license are required to inform EMRA of their registered electronic mail addresses until February 23, 2016 unless they have already done so.
• Previously, only letters of guarantee was acceptable by EMRA during pre-license and license applications, now alternatively it is possible to submit “cash in TL currency” instead of a letter of guarantee. 
• If EMRA deems appropriate the transfer of an electricity generation license holder’s rights and liabilities to another legal entity (provided that the transferee has the same shareholding structure with the transferor), EMRA will determine certain liabilities of the new legal entity and will grant a certain time period. In case such requirements are not fulfilled by the new legal entity within the granted time period, the transfer application will be rejected by EMRA.    

Furthermore, if following the pre-license and/or license application, in case any of the applicant legal entity’s (i) shareholders, (ii) board members (for joint stock companies) and (iii) directors (for limited liability companies) become prohibited from respectively being shareholders, board members and directors in the legal entities applying for licenses within the 3 (three) years following the license cancellation date, EMRA shall grant 90 (ninety) days for such circumstance to be remedied. Otherwise, the legal entity’s pre-license and/or license application will be rejected. 

• For pre-license applications as to establishment of “national coal” based generation plants, the share capital of the applicant company shall be increased to (i) 1% of the total investment amount provided by EMRA for pre-license application, and (ii) 5% of the total investment amount provided by EMRA for license application.   
• The outcome of the environmental impact assessment (“EIA decision”) shall have been obtained and submitted to EMRA while making the pre-license applications. Pre-license applications based on wind, solar, hydraulic or geothermal energy are exempt from such requirement. 

The EIA decision as to applications based on wind, solar, hydraulic or geothermal energy should be obtained within the pre-license period. Within 90 (ninety) days following EMRA’s decision as to issuance of a pre-license, the pre-license holder shall apply to the relevant authority for the EIA decision.  

Legal entities, whose pre-license applications are at the assessment by EMRA as of the date of the Amendment Regulation, shall be obliged to obtain the EIA decision and submit it to EMRA until December 23, 2017. 

• EMRA will complete its review on the pre-license application documents within 20 (twenty) days upon submission of the documents. Before the amendment, EMRA had 10 (ten) days for reviewing the pre-license application documents. 
• In case there is a missing document and/or information among the pre-license application documents based on “wind and solar energy”, such applications will be returned to the applicant without any further evaluation. For other pre-license applications, in case of a missing document and/or information, an additional 15 (fifteen) days will be granted to the applicant to complete the missing document and/or information.
• After obtaining an electricity generation license on a land, also landowners may apply for establishing a generation plant on this land without a license and such application can be accepted provided that (i) the General Directorate of Renewable Energy approves the technical assessment and (ii) such generation plant does not affect the electricity generation license and any other licensed generating plant.   
• Requirement for obtaining relevant opinions from relevant authorities during the pre-license period in accordance with the Regulation on Prohibited Military Zones and Safety Zones has been removed from the Regulation. 
• A wind energy based license holder shall be obliged to take the relevant measures requested by Turkish Armed Forces and/or Turkish National Security Organization as to wind turbines which have impact on the relevant systems of these institutions.
• Quality standard certificates which will be submitted to EMRA have been determined based on the license types as follows: 
  • Transmission license holders shall be obliged to submit quality standard certificates, to be issued by a certification authority accredited by the Turkish Accreditation Agency, for TS EN ISO 9001, TS ISO 10002, TS 18001 and TS EN ISO 14001 standards.     
  • Market operation license holders shall be obliged to submit quality standard certificates, to be issued by a certification authority accredited by the Turkish Accreditation Agency, for TS EN ISO 9001, TS ISO 10002 and TS 18001 standards within 24 (twenty four) months after obtaining the license.
  • Distribution license holders shall be obliged to submit quality standard certificates, to be issued by a certification authority accredited by the Turkish Accreditation Agency, for TS EN ISO 9001, TS ISO 10002, TS 18001 and TS EN ISO 14001 standards within 24 (twenty four) months after obtaining the license.    
  • Supply license holders shall be obliged to submit quality standard certificates, to be issued by a certification authority accredited by the Turkish Accreditation Agency, for TS EN ISO 9001, TS ISO 10002, TS ISO/IEC 27001 standards within 24 (twenty four) months after obtaining the license.    
• Parties already holding licenses as of the date of the Amendment Regulation shall be obliged to submit the applicable quality standard certificates to EMRA until December 23, 2017. 
• License holder legal entities shall make relevant notifications to EMRA as to their activities in accordance with provisions of the Regulation on Notifications in the Energy Market.   
• The exceptions as to circumstances which are not deemed as changes in pre-license holder’s shareholding structure have been extended. In this respect, change of direct or indirect shareholding structures in the pre-license holder company due to (i) public offering of the license holder or its direct or indirect legal entity shareholders and (ii) exercise of a right of first refusal are no longer deemed as change of shareholding structure.
• In case EMRA approves a license holder legal entity’s merger or spin off transaction and determines any liability, it will also provide certain time period for fulfilment of such requirements. In case such requirement is not fulfilled within the granted time period, EMRA will cancel such approval as to the merger or spin off transaction.
• For the year 2017, the procedure for pre-license applications as to establishment of wind energy based generation plant will be as follows:
  • Turkish Electricity Transmission Corporation (“TEIAS”) will inform the wind energy based generating plant capacity for the year 2017, for the following 5 (five) years and 10 (ten) years to EMRA within 3 (three) months as of December 23, 2015.   
  • As of TEIAS’s notification, within first 5 (five) days in the following sixteenth month, EMRA will accept the pre-license applications as to establishment of generation plant wind energy based.  

III. Other Amendments

Other than the amendments summarized above, some other provisions of the Regulation as to amendment procedures of pre-licenses and licenses, license fees, recording guarantees as revenue have also been revised. Some provisions of the Regulation have been clarified and simplified in terms of wording.

Also, Appendix – 1 (Petition for License Application) and Appendix – 2 (Petition for Pre-license Application) have been updated. An Appendix – 3 (Petition for Pre-license/License Amendment Application) has been added to the Regulation.

(First published in Mondaq on February 4, 2016)

By Nazli Nil Yukaruc, Partner, and Selen Ermanl? Sakar, ELIG, Attorneys-at-Law

CMS Budapest and CMS Paris have advised AXA on the sale of its banking activities in Hungary — run through the Hungarian branch of AXA Bank Europe — to OTP Bank Plc. OTP was advised by the Martonyi Law Firm on the deal. The completion of the transaction is subject to obtaining the relevant regulatory authorizations and should be finalized during the second semester 2016.

The CMS team advising AXA was led by CMS Budapest Partner Ivan Sefer and CMS Paris Partner Jean-Robert Bousquet, supported by Budapest-based Senior Associates Zoltan Poronyi and Eszter Kalman and Associates Nora Jekkel and Sandor Kovacs, and Paris-based Associate Emmanuelle Brunel and Associate Edouard Milhac.

The Martonyi Law Firm did not reply to our inquiries on the matter.

Image Source: Tupungato / Shutterstock.com

Turkish lawyer Tuna Colgar has been promoted to Partner at Erdem & Erdem in Istanbul.

Colgar joined Erdem & Erdem in 2013. He works in the firm’s Corporate Affairs Department, where he focuses on M&As, project finance, share transfers, and corporate structuring and spin-offs.

He graduated from Istanbul Bilgi University Law Faculty in 2002 and subsequently obtained an LL.M. from the school’s Law of Economy Master’s program.

ODI has advised the Tus Group on restructuring of approximately EUR 400 million of financial debt, predominantly conducted within the court-sanctioned procedure of preventive restructuring, providing a framework for operative and financial restructuring of Group companies in Slovenia, Bosnia and Herzegovina, Serbia, and Macedonia. This is the third restructuring of the Group within the past 5 years, two of which were conducted in court, and one out. The overall financial debt of all three Slovene companies has been restructured until the end of 2020. The lenders were advised by the KRB law firm, with Rojs, Peljhan, Prelesnik & Partners (RPPP) advising HETA as well.

Based on the strong financial creditors’ support for the Group’s plan of reorganization – namely, the approval of nine major banks, which hold more than 75% of financial debt of Slovenia-incorporated Tus companies – those companies were able to obtain court approval of their financial restructuring, extending the binding effects of a concluded restructuring agreement to the financial creditors which did not enter into it. 

According to ODI, “Tus Group … emerged from the respective proceedings well-positioned to provide continued service to their customers throughout the region. In particular, the restructuring enabled Tus Group to systematically and consistently restructure [its] financial debt in Slovenia, providing the Group companies with needed liquidity and flexibility without causing any disruption to their day-to-day business operations.” 

According to the ODI team involved in the restructuring, the transaction was particularly complex, not only because of the large number of stakeholders (22 lenders altogether), but also because the concept of restructuring of financial liabilities on the level of the entire Tus Group (comprising both Slovene and foreign entities) was embedded within the strict equality requirements of the Slovene Insolvency Law.

The Tus Group commented: “By signing, the financial stabilisation of the company is formally closed. The leadership team led by Mirko Tus managed to reverse the trend of operations already in 2015, whereby it laid solid foundation for the completion of the Tus Group’s business stabilisation. The foundations of a successful restructuring of the Group are trustworthy relationship with suppliers, support of financial creditors and focus on retail activities, enhanced by trust of our customers. These recognised the value of the largest Slovene retailer which gives them access to Slovene products and gives the customer a competitive choice already in 2015.”

The ODI team was jointly led by Ljubljana-based Managing Partner Uros Ilic and Senior Associate Katarina Skrbec, and included Associates Uros Brglez and Primoz Mikolic. 

The KRB team advising the lenders was led by Managing Partner Simon Bracun, supported by Senior Associate Igor Angelovski. The consortium of nine lenders that signed the MRA consisted of Gorenjska Bank D.D., Hypo-Alpe-Adria-Bank, Nova Ljubljanska Banka, Abanka, Postna Banka Slovenije, Nova Kreditna Banka Maribor, Slovenska Izvozna in Razvojna Banka, HETA Asset Resolution, and NLB leasing. 

RPPP advised HETA as well. According to RPPP, “in the process of TUS restructuring we advised HETA, [which] is one of the most important creditors of TUS and without which the restructuring would not be possible. The consent of HETA (due to the size of its exposure and the fact that its claims derive from financial leasing of real estate) was a precondition for restructuring and without it TUS would go to bankruptcy.  In this respect HETA had separate conditions and demanded certain very important provisions against TUS and also other participating creditors.” RPPP reported that HETA both demanded and received “separate conditions regarding disinvestment of certain valued real estates and TUS and other creditors had to consent to that.”

KPMG acted as financial advisors for the bank consortium.

Soltysinski Kawecki & Szlezak has assisted Orbico d o.o., with its seat in Croatia, in a transaction involving the acquisition of 100% of the shares in Optimum Distribution CZ&SK s.r.o. from Empik Media & Fashion S.A., as well as 100% of the shares in Optimum Distribution Sp. z o.o. from Mataro Sp. z o.o., a direct subsidiary of Empik Media & Fashion S.A. The value of the transaction is PLN 82 million (approximately EUR 18.5 million).

The companies acquired by Orbico, together with their subsidiaries (including Amersport Group, “Soul”, and Amersport Russia), form the Optimum Group, which operates in the sector of distribution of luxury cosmetics, lifestyle clothes, and shoes in Poland, the Czech Republic, Slovakia, Russia, Ukraine, and Romania. 

The scope of SK&S advice included carrying out an audit of the acquired group of companies, negotiating the transaction documentation, and assisting in the signing of the preliminary share sale agreement, which was executed on January 18, 2016. 

The SK&S tea was headed by Partner Pawel Moskwa, who was assisted by Senior Associate Leszek Malecki, Associate Agnieszka Skowronek, and Associate Edyta Prociak.

SK&S did not reply to our inquiry about counsel for Empik Media & Fashion.

On 26 January 2016, the Ukrainian Parliament took a long-awaited and significant step to improve the merger control rules in Ukraine.

The president is expected to sign the new competition act, which will enter into force at the end of April. The change will considerably decrease the regulatory burden on undertakings and shorten the merger control review process. In particular, foreign-to-foreign transactions are expected to benefit from the overhaul. Some significant (and unnecessary) hurdles remain, however.

Notification Tresholds Raised, but…

The law introduces a two-tier jurisdictional test and raises the turnover / assets thresholds. The tests are as follows:

• aggregate worldwide assets or turnover of the undertakings concerned exceed EUR 30 million, and 
• aggregate Ukrainian assets or Ukrainian turnover of each of at least two undertakings concerned exceed EUR 4 million.

or

• aggregate Ukrainian assets or Ukrainian turnover of (as a group) the target or one of the founders of a new entity exceed EUR 8 million (previously EUR 1 million), and 
• worldwide turnover of at least one other undertaking concerned exceeds EUR 150 million.

The new jurisdictional test significantly increases the turnover and asset (in particular domestic) thresholds and is expected to reduce the number of concentrations that require a filing in Ukraine. Whilst this is generally positive, Ukrainian merger control law continues to lack a second domestic turnover threshold (second test) and still includes the seller’s assets and turnover in the test (on the side of the target). As a result, the Ukrainian merger control regime will continue to catch a range of transactions that have a limited nexus to the Ukrainian market.

Shorter and Simplified Review Period

A simplified and shortened (25 days) review process will be available in the following cases: (i) only one undertaking concerned is active in Ukraine, or (ii) the market shares of the undertaking concerned are insignificant (i.e. their combined share does not exceed 15% on markets where there are horizontal overlaps between the parties or 20% on vertically related markets). The simplified and short review process is expected to mainly benefit foreign transactions. Details and guidelines on the simplified procedure will be set out in a separate regulation to be adopted by the competition authority. 

Other Changes

Under the new regime, the notifying party will be entitled to request pre-notification meetings with the authority. 

Regrettably, the new law does not introduce the concept of ancillarity, and “concerted actions” (in particular ancillary non-compete clauses) are expected to require separate anti-trust notifications also in the future. The law remains unclear in this regard.

Finally, filing fees for merger control notifications will increase, but will remain at a low level by international standards, amounting to around EUR 750 for concentrations and to around EUR 550 for “concerted actions”.

By Gunter Bauer, Partner, Taras Dumych, Partner, and Sergii Zheka, Associate, Wolf Theiss

PeliFilip has assisted Banca Transilvania (BT) on its acquisition of a performing loans portfolio granted by Bank of Cyprus to retail clients in Romania. Bank of Cyprus was advised by Reff & Asociatii on the deal.

BT reports that the documentation of the transaction was signed on January 28, 2016. According to Andrei Burz-Pinzaru, Partner at Reff & Asociatii, this represents “one of the very few transfers of performing loans portfolios (the third of its kind in Romania, after the portfolio transfer from Citibank to Raiffeisen and the transfer from RBS to Unicredit, both performed in 2013).” 

Commenting on the transaction, which is scheduled to be completed at the end of February, PeliFilip Partner Carmen Peli said: “This transaction is an exception for the Romanian market, which has been dominated lately by sales of non-performing loan portfolios. We thank our partner – Banca Transilvania – for the excellent collaboration we have and for the opportunity to engage with them in some of the most important transactions in the local banking sector.”

The PeliFilip team assisting BT on the deal consisted of Partners Peli and Monica Iancu and Senior Lawyer Alexandra Manciulea. The same firm advised BT on its takeover and integration of Volksbank Romania at the end of 2014 (as reported by CEE Legal Matters in December 2014), a deal discussed in detail by CEE Legal Matters with Bogdan Plesuvescu, the Chief Legal Officer of BT in our Deal 5 Section here. 

Aside from Burz-Pinzaru, the main team members from Reff & Asociatii consisted of Managing Associates Mihaela Maxim, Paula Cringanu, Senior Associate Andreea Serban, and Associate Alexandra Pop.

Raidla Ellex has advised Danske Bank A/S in a transaction by which AS LHV Varahaldus, a subsidiary of the Estonian financial group LHV,  acquired 100% of the shares of Danske Capital AS, an asset management company based in Estonia. The transaction requires the approval of the Financial Supervision Authority and the Competition Authority, which are expected near the end of Q2 2016.

In order to finance the transaction, LHV Group will increase the share capital of LHV Varahaldus and purchase subordinated bonds of the company.

Raidla Ellex reports that “the aim of the deal is to expand the business of LHV Varahaldus and thereby offer clients of the mandatory pension fund the best long-term investment service. After the finalization of the transaction the mandatory pension fund market share of LHV Varahaldus will be approximately 30%.” The firm also reports that the plan is to merge Danske Capital with LHV Varahaldus and to merge pension funds with similar investment strategies. The receiving funds shall be LHV pension funds and the merging funds shall be the funds managed by Danske Capital.

Danske Capital manages three mandatory pension funds and two voluntary pension funds. The assets under management of Danske Capital currently stand at EUR 235.8 million, and there are over 43,000 active clients in the Danske mandatory pension funds.

The Raidla Ellex team consisted of Partner Raino Paron and Senior Associates Helen Ratso and Gerda Liik, all led by Partner Sven Papp.

Raidla Ellex did not reply to inquiries about the deal.

CMS has advised developer Garvest Real Estate on the sale of the Pixel office building in Poznan, to the Globe Trade Center, for EUR 32.2 million. Hogan Lovells advised the Global Trade Center on the deal.

The Pixel office building offers 14,500 square meters of space set over 7 floors above ground and has, according to CMS, “a distinctive form designed by JEMS Architekci.” The building is located at 182 Grunwaldzka street in Poznan, and is wholly occupied by the Allegro Group. The property also includes 3 underground floors offering 399 parking spaces and additional 32 surface-level parking spots. The compound features timber bicycle sheds, showering facilities, and locker and drying rooms for bicyclists on the ground floor. According to a GTC press release, “Pixel is an example of synergy between technological sophistication, functionality and ecological footprint thanks to common terraces, green roofs and a landscaped court, crisscrossed by footpaths and bicycle paths. Allegro’s 1,400 employees are taking advantage of the compound’s restaurant, a nursery and pre-nursery for their children.”

“We are delighted to announce the acquisition of Pixel office building,” said GTC CEO Thomas Kurzmann. “Following the successful completion of our capital increase and the acquisition of Duna Tower in Budapest earlier this year, we are continuing to execute our growth strategy. The acquisition of Pixel office building marks an important step to further establish and extend GTC’s local presence in major cities in Poland and benefit from the improving office market.” 

For CMS, the sale of the Pixel office building was the second transaction in the Poznan office property market in the last few months, following its assistance to Bluehouse Capital Advisor in its acquisition of the Malta House building (as reported by CEE Legal Matters on August 6, 2015).

“Investors’ interest seems to have been shifting towards regional office property markets in Poland for some time and it looks like this trend is here to stay,” said CMS Partner Wojciech Koczara, who led CMS’s team on the deal. “High quality assets in regional cities may be an interesting alternative considering that, with a growing supply of office space in Warsaw, owners may find it more and more difficult to obtain attractive leasing terms for their office space.” Koczara was assisted by CMS Associate Mateusz Wosiek.

The Hogan Lovells team supervised by Partner Jolanta Nowakowska-Zimoch consisted of Counsel Agata Jurek-Zbrojska, Associate Barbara Pancer, and Trainee Advocate Zuzanna Bafia.

Image Source: panoramio.com

Hogan Lovells Moscow has assisted Nevskaya Medicinskaya Infrastruktura, a joint venture of Pizzarotti I.E. and Gazprombank, in relation to a EUR 240 million public-private partnership (PPP) project with the City of St. Petersburg. DLA Piper advised the City of St. Petersburg.

The parties signed the PPP agreement for the Design-Build-Finance-Maintenance (DBFM) project at the end of December 2015. Hogan Lovells describes it as “one of the first healthcare PPPs in Russia and CIS and by far the biggest one to date.”

Pizzarotti is an Italian construction company and Gazprombank is the third largest bank in Russia.

The Hogan Lovells team was led by Moscow Partner Alexander Dolgov, Head of the firm’s IERP practice in Russia and CIS, who commented: “We feel honored to be part of this new success for the Russian PPP market having helped the client team to bring to successful commercial close this groundbreaking project. It is not only one of the first and the largest healthcare PPP in Russia and CIS, but also the last PPP in St. Petersburg structured on the basis of the regional PPP law prior to the Federal Law on PPP entering into force on 1 January 2016. We hope that it will pave the way for further private investments into Russian healthcare, including from leading international investors and operators.”

Dolgov was assisted by Hogan Lovells Senior Associates Konstantin Makarevich and Svetlana Sorkina.

DLA Piper did not reply to our inquiries.